THE OFFICE OF APPEALS HAS IMPROVED
COMPLIANCE WITHIN ITS COLLECTION DUE PROCESS PROGRAM; HOWEVER, SOME IMPROVEMENT
IS STILL NEEDED

Issued on July 15, 2010

Highlights

Highlights of
Report Number: 2010-10-075 to the
Internal Revenue Service Chief of Appeals.

IMPACT ON TAXPAYERS

The Office of Appeals (Appeals)
continues to show improvement in complying with the statutory requirements for
its Collection Due Process (CDP) program.TIGTA determined that Appeals classified most taxpayer requests
properly; as a result, these taxpayers received the appropriate type of
hearing.Also, in most cases, Appeals
personnel input the proper computer coding to identify that taxpayer requests
were received and completed.

However, hearing officers did
not always document their impartiality as required.As a result, there is a risk of prior
involvement in the taxpayer’s case and a potential lack of independence.Finally, on some taxpayer accounts, the
Collection Statute Expiration Date was extended longer than the length of the
CDP hearing, a potential violation of taxpayer rights.

WHY TIGTA DID THE AUDIT

This
audit was initiated because TIGTA is statutorily required to determine whether
the Internal Revenue Service complied with the provisions of 26 United States
Code Sections 6320 (b) and (c) and 6330 (b) and (c) when taxpayers exercised
their rights to appeal the filing of a Notice of Federal Tax Lien or the
issuance of a notice of intent to levy.

WHAT
TIGTA FOUND

In response to
our previous audit, Appeals developed additional CDP procedures in December
2009 to better ensure that proper documentation is retained in its case
files.During the review, Appeals
located and provided office case files containing complete documentation for
our CDP and Equivalent Hearing samples, an issue that was a concern in prior
years.

However,
some cases in our samples did not include an impartiality statement.Appeals personnel informed us that on April
29, 2008, a programming enhancement was implemented on their Appeals
Centralized Database System.It assists
employees working CDP cases to document prior involvement with taxpayers.However, TIGTA identified some cases that
were closed after the enhancement date where hearing officers did not document
their impartiality in the case files or in the Decision Letters as
required.

Finally,
our case reviews identified 10 taxpayer accounts with incorrect Collection
Statute Expiration Dates.On five taxpayer
accounts, the Collection Statue Expiration Date was extended in error, allowing
the Internal Revenue Service additional time to collect any balances owed by
these taxpayers, a potential violation of taxpayer rights.Conversely, the Collection Statute Expiration
Date on the other five taxpayer accounts was too short, which could cause the
Internal Revenue Service a potential loss of revenue.

WHAT TIGTA RECOMMENDED

TIGTA
recommended that the Chief, Appeals, determine whether the Appeals Centralized Database
System enhancement, which requires hearing officers to document their
impartiality, is functioning properly and cannot be bypassed.TIGTA also recommended that Appeals
management review and correct the taxpayer accounts with Collection Statute Expiration
Date errors identified by the audit team.

Appeals
management agreed with both recommendations.Appeals plans to contact the Modernization and Information Technology
Services organization to verify that the coding for the Appeals Centralized Database
System enhancement is functioning properly.If any problems are identified, Appeals plans to take actions to correct
the error.Appeals also indicated it corrected
the erroneous Collection Statute Expiration Dates identified in this review.

READ THE
FULL REPORT

To view the report,
including the scope, methodology, and full IRS response, go to: